The U.S. auto industry posted a decline for the month of August, ending summer on a gloomy note.
This was long expected as customer demand has begun to soften. General Motors (GM, Financial), Ford (F, Financial) and Toyota (TM, Financial) – the top three automakers – posted declines of at least 5%. This also reduces the prospects of matching this year’s auto sales with the record set last year. Almost all carmakers missed estimates as the long six years’ growth for the industry appeared to have come to a halt in August. According to Autodata Corp., overall industry sales plunged 4.2% to 1.51 million vehicles.
While automakers like General Motors, Ford and their Japanese counterparts struggled to post gains, Chrysler managed to register gains though it missed estimates. The seasonally adjusted annual sales for August came in at 16.98 million. This remains down from July when it was 17.88 million vehicles.
Performances of U.S. automakers
Detroit giant General Motors registered a decline of 5% year over year to 256,429 vehicles. Sales of the company’s best seller Chevrolet Silverado fell 5% as compared with August 2015. Moreover, brands like Buick, Chevrolet and GMC failed to impress. Rental Fleet sales also dropped 34% year over year. On the contrary, Cadillac sales surged 4%.
Data source: www.goodcarbadcar.net
Ford also witnessed a decline in its August sales, down 8% to 214,482 units sold from the same period last year. Lincoln brand sales grew 7% on the back of the all new MKX SUV. Ford brand sales, on the other hand, fell 9%. Fleet sales dropped 10%. Deliveries of both F-Series pickups and Explorer SUV were down. Nevertheless, retail sales for the trucks were high.
Data source: www.goodcarbadcar.net
Chrysler was the only one among the U.S. automakers to post gains, up 3% year over year. Yet the company missed analyst estimates of a 5% gain. Chrysler brand sales plunged 22% while Fiat sales were down 21%. Ram, Jeep and Dodge sales were robust. Retail sales amounted to 150,153 units in August whereas fleet sales were 46,603 units.
Performance of other automakers
Toyota sales dropped 5% in August to 213,125 vehicles. This was largely due to decline in the deliveries of Corolla, Camry and Prius cars. Toyota brand sales were not impressive and were down 5%. On the other hand, luxury Lexus sales declined 8% during the month.
Nissan (NSANY, Financial) was another automaker that struggled to post gains in August as sales dropped 6.5%. Deliveries for both Nissan and Infiniti premium brands were shaky. However, crossovers, SUVs and pickups posted record sales for August, up 19% compared with a year ago.
Honda (HMC, Financial) sales plunged 3.8%, taking analysts by surprise; they expected a drop of 1%. Honda brand witnessed a drop of 10%, and Acura sales plunged 7%.
August sales reiterate the shifting trend from sedans and hatchbacks to SUVs and trucks. The major challenge for the automakers is to figure out a way to overcome the plateauing customer. Slowing sales may trigger automakers to cut production or offer greater incentives to boost volumes, but this will erode their top and bottom lines. It will be interesting to see how sales chart trend over the next couple of months.
Disclosure: I do not hold any position in any of the stocks mentioned in this article.
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